Matalan first quarter revenue rises on childrenswear, online offering

By

Barbara Santamaria

Published
Jul 9, 2018

Clothing and homeware retailer Matalan increased its revenues by almost 5% in the first quarter ended 26 May 2018, but warned that ongoing currency pressures are impacting its profit margins.

Sales at the UK value retailer increased to £265.9m during the quarter, compared with revenues of £253.4m in the same period last year. This was driven by a 39% increase in online sales and the good performance of the brand’s Kids ranges, while a store refurbishment programme helped deliver growth in physical stores.

“Our first quarter represents a strong set of results. Good stock management, flexibility in our operating model and agility in our customer contact strategy helped us outperform a volatile market,” said Jason Hargreaves, CEO.

During the period, the retailer focused on increasing its product choice, improving the in-store shopping experience and upgrading its website, measures that have been “really well received” according to Hargreaves.

“Our Kids ranges have been a highlight this season although we have seen strong performance across the board. We have improved the offer in delivering the combination of design, quality and value that customers love from Matalan and seen some great reactions. We are very proud of what the team has achieved and it cements our position as a retailer of choice for the whole family, in stores and online.”

But while EBITDA was up by 11% to £24.8m in the first quarter, Matalan remains cautious when it comes to its full year outlook.

“We don’t expect the retail climate to improve in the short term and market conditions will remain difficult,” Hargreaves said. “Currency pressures on operating margins are ongoing. We are therefore cautious in our outlook but confident that our strategy is delivering for customers which positions us well.”

Last year, Matalan said it was concerned about inflation and the impact of the 2017 fall in the pound, which increased the cost of imported goods. Relying on an offering that promises great value for families, these pressures have been absorbed by Matalan to avoid price increases. However, continued higher sourcing costs will start to bite into the company's margins.